Eni Seeks Funds For Mozambique Project, Approaches Banks
Zacks Investment Research | Sep 27, 2016 11:43PM ET
Reuters recently reported that Eni SpA (TO:E) is approaching banks and seeking billions of dollars to fund the development of a huge offshore gas project in Mozambique. This is one of the most important steps taken by the company to start work on the project after a long delay.
The project is of huge importance to the company as the reserves that were discovered from the Rovuma Basin of Mozambique amounted to 85 trillion cubic feet. Notably, this reserve is sufficient to provide natural gas to Germany, Britain, France and Italy for almost two decades.
As per the sources, the banks are likely to come up with the terms of the loan within three to four weeks. Based on the decision of the banks, Eni will take the final investment decision for the Mozambique gas project. The company is expected to reach its final investment decision by the year-end 2016.
Rome, Italy-based Eni, along with its consolidated subsidiaries, is involved in oil and gas, electricity generation, petrochemicals, oilfield services and engineering industries. The company’s major business segments are Exploration and Production (E&P), Gas and Power, and Refining and Marketing.
The prospects of Eni’s upstream operations appear bleak as oil prices are expected to remain low till 2017. According to OPEC, non-OPEC members will likely continue to produce more oil than expected during 2016 and 2017. Moreover, IEA expects the oil market to remain oversupplied at least till the first half of 2017. Hence, the persistent weakness in crude prices following oversupplied commodity market might hurt the company’s upstream operations.
As a result, the company currently carries a Zacks Rank #4 (Sell), implying that it will underperform the broader U.S. equity market over the next one to three months.
ENI (MI:ENI) SPA-ADR Price
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